Correlation Between Travelers Companies and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Travelers Companies and ProShares Short at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Travelers Companies and ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Travelers Companies and ProShares Short MSCI, you can compare the effects of market volatilities on Travelers Companies and ProShares Short and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Travelers Companies with a short position of ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and ProShares Short.
Diversification Opportunities for Travelers Companies and ProShares Short
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Travelers and ProShares is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and ProShares Short MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short MSCI and Travelers Companies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Travelers Companies are associated (or correlated) with ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short MSCI has no effect on the direction of Travelers Companies i.e., Travelers Companies and ProShares Short go up and down completely randomly.
Pair Corralation between Travelers Companies and ProShares Short
Considering the 90-day investment horizon Travelers Companies is expected to generate 1.58 times less return on investment than ProShares Short. In addition to that, Travelers Companies is 2.09 times more volatile than ProShares Short MSCI. It trades about 0.03 of its total potential returns per unit of risk. ProShares Short MSCI is currently generating about 0.1 per unit of volatility. If you would invest 1,561 in ProShares Short MSCI on September 17, 2024 and sell it today you would earn a total of 79.00 from holding ProShares Short MSCI or generate 5.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
The Travelers Companies vs. ProShares Short MSCI
Performance |
Timeline |
The Travelers Companies |
ProShares Short MSCI |
Travelers Companies and ProShares Short Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Travelers Companies and ProShares Short
The main advantage of trading using opposite Travelers Companies and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies position performs unexpectedly, ProShares Short can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ProShares Short will offset losses from the drop in ProShares Short's long position.Travelers Companies vs. W R Berkley | Travelers Companies vs. Markel | Travelers Companies vs. RLI Corp | Travelers Companies vs. White Mountains Insurance |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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